I am not joking. While Fed-bashing may be all the rage, the fact is that the Fed is the only part of the federal government that is trying to DO something about unemployment, rather than just yapping about it.
Who has the world's largest bank vault door?
The Fed has been given a full-employment mandate by Congress. Full employment for the USA mind you; not China, Mexico, or India. However, Congress did not give the Fed sufficient powers to pursue this mandate. Trade policy, immigration policy, and currency exchange-rate policy all have huge impacts on unemployment, but the Fed has no say at all in those policies.
How is that possible?
When the Fed opened its doors in November 1914, the USA had a nationalist trade policy and a 17% tariff on imported goods. I suppose it was taken for granted that the country would always follow such a policy, and it was therefore not necessary to give the Fed any power over foreign affairs.
Today we have a 1% tariff, have lost entire industries to cheap imports, and our borders are virtually wide-open to mass immigration.
Observing the actions of the Congress, White House, and “Jobs Czar”, a visiting space alien would conclude that the USA was following a deliberate policy of high unemployment.
And that is exactly what is happening.
What would the Fed do if it had power over trade and immigration? I have no idea. But imagine that you are chairman of the Cleveland Fed. Your job is to make sure that the banking system runs smoothly, that checks don’t bounce, that savings are not wiped out in panics, etc. And you also research and report on the industry in your region, providing all kinds of important statistics for economists. Are you happy when you see yet another plant close down and head for Mexico?
What does the chairman of the Cleveland Fed think when he walks by his bank-vault door, which is the largest in the world? Do you think he is happy to watch his territory swirling down the economic drain of history?
My guess is that the Fed’s regional nature makes it more patriotic than the White House or Congress. Regional Fed presidents don’t go to Washington, after all. And since Fed Head’s don’t have to fund political campaigns, they don’t appear to be bribe-able. Beijing and the multinationals campaigned hard against QE2, and I wouldn’t be surprised if they offered huge bribes to the Fed. But Ben Bernanke and the Fed persevered against the pressure and threats, and made what they believed would be good policy for the USA and American citizens.
They should be rewarded for that.
The Fed should be given power over immigration. Maybe they should be able to declare a “jobs emergency” and call a temporary halt to all immigration. Maybe they should be given veto power over trade pacts, and the power to adjust dollar exchange rates with predatory nations such as China.
Now, I’m sure you are shouting at your monitor: “That’s would be totally unconstitutional!”.
But let me ask you this:
Was it constitutional when these powers were given over to the multinationals and their partners in Beijing?
I don’t think so.